RING ENERGY, INC.
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 5, 2026
REI$1.11-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001384195-26-000072
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001384195-26-000080
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 73 previous paragraphs and 103 current paragraphs.
45 unchanged; 19 reworded; 24 added; 9 removed; 0 previous and 15 current paragraphs rearranged.
Tables are not compared: 10 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
During the second quarter of 2026, the Company drilled a total of seven wells and completed a total of four wells. Specifically, in the Northwest Shelf the Company drilled and completed one 1.5-mile horizontal well and one 1-mile horizontal well in Yoakum County, with a working interest of approximately 98% and 100%, respectively. In the Central Basin Platform, the Company drilled and completed one 1.5-mile horizontal well in Andrews County with a working interest of approximately 99%, and one 1.5-mile horizontal well in Crane County with a working interest of of approximately 96%. The latter of these two wells, while completed, was not put on pump until the third quarter of 2026 and did not contribute significant volumes in the second quarter of 2026. Also in Crane County, the Company drilled three 2-mile horizontal wells, each with a working interest of 100%, and was in the process of drilling one SWD well. The three 2-mile horizontal wells represent the first laterals of this length drilled by the Company in an area that has been historically developed with vertical wells. All four of these wells are to be completed during the third quarter of 2026.
Current report
Our financial results are significantly affected by crude oil and natural gas prices. Commodity prices are influenced by numerous factors beyond our control, including changes in domestic and global supply and demand, geopolitical events, macroeconomic conditions, transportation and processing constraints, and other market factors. As a result, commodity prices have been volatile and are expected to remain volatile.
Current report
During the second quarter of 2026, crude oil prices remained elevated through much of the quarter before declining toward quarter-end. In addition, natural gas prices in the Permian Basin continued to be adversely affected by regional takeaway constraints and elevated processing and transportation costs. These conditions adversely affected realized natural gas prices during the quarter. The Company continues to monitor market conditions and evaluate available alternatives with respect to the marketing of its production and commodity price risk management activities.
Current report
Future changes in commodity prices may materially affect the Company's financial condition, results of operations and cash flows.
Current report
Commodity Price Environment and Hedging Impact
Current report
During the second quarter of 2026, crude oil prices increased meaningfully relative to the levels when a significant portion of the Company's hedge portfolio was established. As a result, while the Company benefited from higher oil prices, realized settlements on crude oil derivative contracts reduced realized pricing and cash flow relative to unhedged market prices. During the quarter, the Company recognized realized losses on crude oil derivative contracts of approximately $19.6 million.
Current report
Our hedge program is largely required under our Credit Facility and was designed to protect cash flows, support liquidity, and provide greater certainty around capital allocation and balance sheet objectives. While our hedge positions reduced participation in higher oil prices during the quarter, they also provide downside protection in a volatile commodity price environment.
Current report
The Company continues to evaluate its commodity price risk management strategy and hedge profile in light of requirements under the Credit Facility, market conditions, balance sheet strength, capital allocation priorities, and anticipated commodity price exposure.
Current report
No impairment was recorded for the three months ended June 30, 2026. For the six months ended June 30, 2026, the Company recorded a non-cash impairment charge of $162.1 million as a result of lower oil prices impacting the present value of estimated future net revenues.
Current report
Oil sales. Oil sales increased approximately $27.4 million from $82.8 million to $110.2 million, driven by a price variance of $37.8 million from an increase in the average realized price per barrel from $62.69 to $95.45 as a result of higher oil commodity prices. This was offset by a volume variance of $(10.4) million from a decrease in sales volume from 1,320,508 barrels to 1,154,147 barrels. The decrease in volume of (166,361) barrels was attributed to natural production declines from our legacy assets.
Current report
Natural gas liquids sales. NGL sales increased approximately $1.6 million from $2.1 million to $3.7 million. NGL sales volumes for the three months ended June 30, 2026 were 370,819 barrels compared to 333,374 barrels for the comparable period in 2025. Of the increase in volume of 37,445 barrels, 17,360 barrels were attributable to wells acquired and drilled in the Lime Rock acquisition area, and an increase of 20,085 barrels was attributable to our legacy assets in correlation with gas sales. The average realized price per barrel of NGLs was $9.96 for the three months ended June 30, 2026 compared to $6.19 for the three months ended June 30, 2025, due to stronger market conditions. Specifically, the gross realized price per NGL barrel was $22.38 and the average fees per barrel were $(12.42), resulting in a net realized price of $9.96 for the three months ended June 30, 2026, while the gross realized price per NGL barrel was $19.02 and the average fees per barrel were $(12.83), resulting in a net realized price of $6.19 for the same period in 2025.
Current report
Oil sales. Oil sales increased approximately $27.1 million from $159.3 million to $186.4 million, with a price variance of $36.9 million from an increase in the average realized price per barrel from $66.17 to $82.50 as a result of higher oil commodity prices. This was offset by a volume variance of $(9.8) million due to a decrease in sales volume from 2,407,202 barrels to 2,258,970 barrels. The decrease in volume of 148,232 barrels was impacted by a decrease of 274,977 attributable to natural production declines in the legacy assets, offset by an increase in volumes of 126,745 from wells acquired and drilled in the Lime Rock acquisition area.
Current report
Lease operating expenses. Our total lease operating expenses (“LOE”) decreased from $20.2 million to $18.4 million and decreased on a per Boe basis from $10.45 to $10.12. These per Boe amounts are calculated by dividing our total lease operating expenses by our total volume sold, in Boe. Total LOE decreased primarily due to a 6% decrease in production of 118,774 Boe as well as targeted cost reductions. The primary cost drivers for the period were decreases of $0.9 million in electricity costs, $0.6 million in chemicals, $0.5 million in equipment rentals, and $0.3 million in pressure, vacuum, and hot oil truck costs, offset by increases of $0.3 million in workovers and $0.2 million in contract and lease services.
Current report
Ad valorem taxes. Our total ad valorem taxes increased from $1.6 million to $2.2 million and increased on a per Boe basis from $0.85 to $1.21. Of the $0.6 million increase in ad valorem taxes, $0.3 million was for Yoakum County tax estimates, $0.1 million was for Andrews County tax estimates, $0.1 million was for Crane County tax estimates, and $0.1 million was for Ector County tax estimates.
Current report
Depreciation, depletion and amortization. Our depreciation, depletion and amortization decreased from $25.6 million to $20.1 million, with $5.4 million of the reduction from lower depletion. The decrease in depletion was the result of a price variance of $(3.8) million, due to a lower depletion rate per Boe, driven by a decrease in the total estimated costs of property from the impairment recognized in the last two quarters of 2025 and the first quarter of 2026, coupled with an increase in the amortization base (total Boe). Also impacting the lower depletion was a volume variance of $(1.6) million from a decrease of 118,774 in Boe produced. Our average depreciation, depletion and amortization per Boe decreased from $13.19 per Boe to $11.06 per Boe.
Current report
Ceiling test impairment. As a result of the higher oil prices impacting the present value of estimated future net revenues, the Company did not incur a ceiling test impairment on its oil and natural gas properties during each of the three month periods presented.
Current report
General and administrative expense. General and administrative ("G&A") expense increased from $7.1 million to approximately $8.0 million. The approximate $0.8 million cost increase was primarily driven by an increase of $0.8 million in stock compensation, $0.2 million in other professional fees, and $0.1 million in meals and entertainment. These costs were offset by reductions of $0.3 million in salaries and bonuses.
Current report
(1) Not meaningful.
Current report
Interest expense. Interest expense decreased from $11.8 million to $8.4 million primarily due to lower amounts outstanding on the Credit Facility, with a weighted average daily debt of approximately $415.0 million during the second quarter of 2026 compared to approximately $456.3 million during the second quarter of 2025, coupled with a reduction in interest rates, with a weighted average annual interest rate of 7.4% in the second quarter of 2026 compared to 8.5% in the second quarter of 2025. Also impacting the decrease in interest expense was a reduction in deferred financing costs recognized from the credit agreement modification which was completed in June 2025.
Current report
Other income. The Company's other income decreased by $141,170, due to a reduction of $150,770 from a pipeline easement lease, offset by an increase of $9,600 from a ranching lease.
Current report
(1) Not meaningful.
Current report
Cash Flows
Current report
Equity Offering
Current report
In May 2026, the Company completed an underwritten public offering of 44,444,445 shares of common stock at a public offering price of $1.35 per share and gross proceeds of $60.0 million. In June 2026, the underwriters exercised an option to purchase an additional 6,666,666 shares of common stock at a public offering price of $1.35 per share and gross proceeds of $9.0 million. The sale of common stock resulted in total gross proceeds of $69.0 million and net proceeds of $64.5 million, after deducting underwriting fees and offering expenses.
Removed paragraphs (9)
Previous report
As a result of the Company's drilling and operational activities, total production for the three months ended March 31, 2026 increased 5%year over year to 1.74 million Boe. The increase in production was driven by contributions from the Lime Rock acquisition and new operated development, partially offset by natural production declines in legacy assets.
Previous report
Operationally, the Company delivered solid field level performance during the quarter. For the three months ended March 31, 2026, Ring generated Exploration and Production segment profit of $49.7 million, despite a challenging commodity price environment, particularly for natural gas. These results reflect continued cost discipline, efficient execution of the development program, and the benefits of the Company’s oil weighted asset base.
Previous report
At the Total Company level, reported results were materially impacted by certain non-cash items. The Company recorded a net loss of $220.6 million for the quarter, driven primarily by a $162.1 million full cost ceiling test impairment and $77.0 million unrealized derivative mark to market adjustments resulting from changes in forward commodity prices.
Previous report
The Company's underlying operating performance and liquidity remained solid during the quarter, and the non-cash charges we incurred did not affect compliance with the financial covenants under the Company’s Credit Facility. Core operating results remain resilient, supported by disciplined capital allocation, ongoing cost improvements, and a hedge position designed to provide cash flow stability in a volatile pricing environment.
Previous report
The Company’s financial results are highly sensitive to changes in commodity prices, and during the first quarter of 2026, oil and natural gas markets experienced significant volatility driven by different factors. In the Permian Basin, natural gas prices remained under severe pressure due to regional takeaway constraints and elevated processing and transportation costs, while crude oil prices were influenced by broader global events late in the quarter.
Previous report
As a result of the sustained weakness in Permian natural gas markets, the Company realized negative net natural gas prices during the quarter, as processing and transportation fees exceeded gross realized sales prices, which adversely impacted reported revenues. In response, management continues to pursue commercially reasonable mitigations, including basis hedging, marketing optimization, and disciplined capital allocation, while maintaining a strong focus on preserving liquidity and long term value.
Previous report
Separately, late first quarter 2026 geopolitical developments affected global crude oil markets, resulting in a sharp increase in crude oil prices. These late quarter price movements adversely impacted the fair value of the Company’s outstanding crude oil derivative positions and contributed to the unrealized derivative losses recorded during the quarter. By contrast, the SEC full cost ceiling test is based on an unweighted arithmetic average of first day of the month prices for the preceding twelve months, and accordingly, these late quarter oil price movements had limited impact on the twelve month average prices used in the Company’s March 31, 2026 ceiling test calculation.
Previous report
Accordingly, because the ceiling test is based on historical twelve month average pricing, it does not fully reflect significant changes in commodity prices that occur late in a reporting period.
Previous report
Oil sales. Oil sales decreased approximately $0.3 million from $76.5 million to $76.2 million, with a price variance of $(1.6) million from a decrease in the average realized price per barrel from $70.40 to $68.97 offset by a volume variance of $1.3 million due to an increase in sales volume from 1,086,694 barrels to 1,104,823 barrels. The increase in volume of 18,129 barrels consisted of two components: an increase in volumes of 143,132 was due to the Lime Rock acquisition, and a decrease of 125,003 was attributed to natural production declines in the legacy assets. The Company's drilling and completion spend was 43% lower in the months that affected production for the first three months of 2026 compared to the same months that affected production in the first three months of 2025. This resulted in less offsets to declining production in the legacy assets. The decreased average realized price per barrel was primarily the result of lower oil prices.
Reworded paragraphs (19)
Previous wording
As a result of the ceiling test, driven by a decrease in the twelve month average commodity price over the past few months, the Company recognized a non-cash impairment charge of $162.1 million for the three months ended March 31, 2026. Depending on market conditions, the Company's discounted future net revenues could continue to decline, which may trigger additional non-cash impairments recognized in future periods. Estimating potential future non-cash impairments is complex due to numerous factors affecting the ceiling test calculation, including but not limited to future prices, operating costs, upward or downward reserve revisions, reserve additions, and tax attributes. The amount of any additional non-cash impairment, if any, is not estimable at this time given the uncertainty of these factors.
Current wording
Estimating potential future non-cash impairments is complex due to numerous factors affecting the ceiling test calculation, including but not limited to future prices, operating costs, upward or downward reserve revisions, reserve additions, and tax attributes. The amount of any additional non-cash impairment, if any, is not estimable at this time given the uncertainty of these factors.
Previous wording
Natural gas sales. Natural gas sales decreased approximately $4.0 million from a negative $0.3 million to a negative $4.3 million. The natural gas sales volume increased from 1,615,196 Mcf to 1,689,512 Mcf, and the average realized price per Mcf decreased from $(0.19) to $(2.54). Of the increase in volume of 74,316 Mcf, an increase of 146,522 was due to the Lime Rock acquisition, offset by a decrease of 72,206 for our legacy assets. The price decrease was driven by lower market conditions. The realized revenue pricing includes the impact of gas plant processing fees that were netted from revenue. For the three months ended March 31, 2026, gross revenues were $(0.48) per Mcf and fees were $(2.06) per Mcf, compared to gross revenues of $1.86 per Mcf and fees of $(2.05) per Mcf for the three months ended March 31, 2025. This resulted in a net realized price of $(2.54) for the three months ended March 31, 2026 compared to $(0.19) per Mcf for the three months ended March 31, 2025.
Current wording
Natural gas sales. Natural gas sales decreased approximately $10.9 million from a negative $2.5 million to a negative $13.5 million. The natural gas sales volume increased from 3,319,004 Mcf to 3,454,171 Mcf, and the average realized price per Mcf decreased from $(0.77) to $(3.90). Of the increase in volume of 135,167 Mcf, an increase of 176,790 was due to wells acquired and drilled in the Lime Rock acquisition area, offset by a decrease of 41,623 for our legacy assets. The price decrease was driven by lower market conditions. The realized revenue pricing includes the impact of gas plant processing fees that were netted from revenue. For the six months ended June 30, 2026, gross revenues were $(1.77) per Mcf and fees were $(2.13) per Mcf, compared to gross revenues of $1.35 per Mcf and fees of $(2.12) per Mcf for the six months ended June 30, 2025. This resulted in a net realized price of $(3.90) for the six months ended June 30, 2026 compared to $(0.77) per Mcf for the six months ended June 30, 2025.
Previous wording
Natural gas liquids sales. NGL sales decreased approximately $1.1 million from $2.9 million to $1.8 million. NGL sales volumes for the three months ended March 31, 2026 were 355,173 barrels compared to 299,366 barrels for the comparable period in 2025. Of the increase in volume of 55,807 barrels, an increase of 40,450 was due to the Lime Rock acquisition, and an increase of 15,357 was from legacy assets. The average realized price per barrel decreased by $4.69 to $4.96 for the three months ended March 31, 2026 compared to $9.65 for the three months ended March 31, 2025, due to lower prices. Specifically, the gross realized price per NGL barrel was $17.42 and the average fees per barrel was $(12.46), resulting in a net realized price of $4.96 for the three months ended March 31, 2026, while the gross realized price per barrel was $22.64 and the average fees per barrel was $(12.99), resulting in a net realized price of $9.65 for the same period in 2025.
Current wording
Natural gas liquids sales. NGL sales increased approximately $0.5 million from $5.0 million to $5.5 million. NGL sales volumes for the six months ended June 30, 2026 were 725,992 barrels compared to 632,740 barrels for the comparable period in 2025. Of the increase in volume of 93,252 barrels, an increase of 57,810 was due to wells acquired and drilled in the Lime Rock acquisition area, and an increase of 35,442 was from legacy assets. The average realized price per barrel decreased by $0.31 to $7.52 for the six months ended June 30, 2026 compared to $7.83 for the six months ended June 30, 2025, due to lower prices. Specifically, the gross realized price per NGL barrel was $19.95 and the average fees per barrel was $(12.43), resulting in a net realized price of $7.52 for the six months ended June 30, 2026, while the gross realized price per barrel was $20.74 and the average fees per barrel was $(12.91), resulting in a net realized price of $7.83 for the same period in 2025.
Previous wording
Gathering, transportation and processing costs. Our total GTP decreased $86,563 from $203,612 to $117,049 and decreased on a per Boe basis from $0.12 to $0.07. The decrease in GTP costs was due to a reduction of $77,561 in gas processing costs and a reduction of $9,002 in NGL processing costs.
Current wording
Gathering, transportation and processing costs. Our total gathering, transportation and processing costs (“GTP”) decreased from $133,809 to $101,902 and decreased slightly on a per Boe basis from $0.07 to $0.06. The decrease in GTP costs was due to a reduction of $40,353 in gas processing costs offset by an increase of $8,446 in NGL processing costs.
Previous wording
Lease operating expenses. Our total LOE decreased from $19.7 million to $18.1 million and LOE per Boe decreased from $11.89 to $10.41. Total LOE decreased despite a 5% increase in production of 86,322 Boe, as a result of the additional production and well count from the Lime Rock acquisition as well as new wells drilled and completed in our development program. The primary cost drivers for the period were decreases in contract and lease services of $1.0 million, chemicals of $0.9 million, equipment rentals of $0.5 million, location repairs and environmental sustainability of $0.3 million, non-op of $0.2 million, and contract pumping services of $0.1 million. This was offset by increases in LOE costs from salt water disposal of $0.5 million, salaries of $0.4 million, and workovers of $0.4 million.
Current wording
Lease operating expenses. Our total LOE decreased from $39.9 million to $36.5 million and LOE per Boe decreased from $11.11 to $10.26. Total LOE decreased from targeted reductions in costs as well as a 1% decrease in production of 32,452 Boe. The primary cost drivers for the period were decreases in chemicals of $1.5 million, equipment rentals of $1.0 million, electricity costs of $0.9 million, contract and lease services of $0.8 million, pressure, vacuum, and hot oil truck costs of $0.5 million, non-operated costs of $0.4 million, and location repairs and environmental sustainability of $0.3 million. This was offset by increases in LOE costs from workovers of $0.7 million, salt water disposal of $0.7 million, salaries of $0.5 million, and compressor rentals of $0.1 million.
Previous wording
Ad valorem taxes. Our total ad valorem taxes increased $0.7 million from $1.5 million to $2.2 million and increased on a per Boe basis from $0.93 to $1.26. An increase in ad valorem taxes of $0.5 million was from the reversal made in the first quarter of 2025 for the 2024 methane tax accrual for the waste emissions charge ("WEC"), which was repealed by Congress on March 14, 2025, with no similar reversal made in 2026. There was also an increase of $0.6 million in Andrews County due primarily to the Lime Rock acquisition. Offsetting these increases was a decrease in the Yoakum County estimates of approximately $0.4 million.
Current wording
Ad valorem taxes. Our total ad valorem taxes increased $1.2 million from $3.2 million to $4.4 million and increased on a per Boe basis from $0.89 to $1.24. An increase in ad valorem taxes of $0.5 million was from the reversal made in the first quarter of 2025 for the 2024 methane tax accrual for the waste emissions charge ("WEC"), which was repealed by Congress on March 14, 2025, with no similar reversal made in 2026. There was also an increase of $0.6 million in Andrews County due primarily to the Lime Rock acquisition as well as a $0.1 million increase from Crane County tax estimates. Offsetting these increases was a decrease in the Yoakum County tax estimates of approximately $0.1 million.
Previous wording
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 4.53% for the three months ended March 31, 2025 and increased to 4.82% for the three months ended March 31, 2026. The overall average percentage of production taxes to oil and gas sales was consistent period over period.
Current wording
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 4.59% for the six months ended June 30, 2025 and increased to 4.82% for the six months ended June 30, 2026. The overall average percentage of production taxes to oil and gas sales was consistent period over period.
Previous wording
Asset retirement obligation accretion. Our ARO accretion increased by $68,947 from $326,549 to $395,496 primarily as a result of newly acquired and drilled wells, offset by those plugged and abandoned and sold.
Current wording
Asset retirement obligation accretion. Our asset retirement obligation (“ARO”) accretion increased from $382,251 to $401,944 as a result of result of newly acquired and drilled wells, offset by those plugged and abandoned and sold.
Previous wording
Depreciation, depletion and amortization. Our depreciation, depletion and amortization decreased approximately $1.2 million from $22.6 million to $21.4 million, with substantially all of the reduction from lower depletion. The decrease in depletion was primarily due to a price variance of $(2.3) million, from a lower depletion expense per Boe, due to an increase in the amortization base. Offsetting this, depletion had a volume variance of approximately $1.2 million from a increase of 86,322 in Boe produced. Our average depreciation, depletion and amortization per Boe decreased from $13.66 per Boe to $12.29 per Boe.
Current wording
Depreciation, depletion and amortization. Our depreciation, depletion and amortization decreased approximately $6.7 million from $48.2 million to $41.5 million, with substantially all of the reduction from lower depletion. The decrease in depletion was primarily due to a price variance of $(6.1) million, from a lower depletion expense per Boe, due to reduction in the total estimated costs of property from the impairment recognized in the last two quarters of 2025 and the first quarter of 2026, coupled with an increase in the amortization base (total Boe). Adding to this was a volume variance of approximately $(0.4) million from a decrease of 32,452 in Boe produced. Our average depreciation, depletion and amortization per Boe decreased from $13.41 per Boe to $11.66 per Boe.
Previous wording
Ceiling test impairment. As a result of the lower oil prices impacting the present value of estimated future net revenues, the Company incurred a ceiling test impairment on its oil and natural gas properties of $162.1 million.
Current wording
Ceiling test impairment. As a result of the lower oil prices impacting the present value of estimated future net revenues, the Company incurred a ceiling test impairment on its oil and natural gas properties of $162.1 million during the six months ended June 30, 2026.
Previous wording
General and administrative expense. G&A expense decreased approximately $1.2 million from $8.6 million to $7.4 million, with the $1.2 million cost decrease primarily due to a decrease of $0.6 million in salaries and bonuses, $0.5 million in additional costs capitalized, and a decrease of $0.1 million in insurance expense.
Current wording
General and administrative expense. G&A expense decreased approximately $0.4 million from $15.8 million to $15.4 million, with the $0.4 million cost decrease primarily due to a decrease of $0.9 million in salaries and bonuses, $0.5 million in additional costs capitalized, offset by an increase of $0.6 million in stock compensation, $0.3 million in other professional fees, and $0.1 million in allowance for credit losses.
Previous wording
Interest income. Interest income decreased $19,529 from $90,058 to $70,529, as a result of $41,747 in lower earnings on excess cash balances in bank sweep accounts, offset by an increase of $22,218 in severance tax interest receipts.
Current wording
Interest income. Interest income increased $59,353 from $159,716 to $219,069, as a result of $37,135 in higher earnings on excess cash balances in bank sweep accounts, as well as an increase of $22,218 in severance tax interest receipts.
Previous wording
Interest expense. Interest expense decreased by approximately $0.9 million from $9.5 million to $8.6 million, primarily due to a decrease in the amortization of deferred financing costs as a result of the amendment and restatement of the credit agreement in the second quarter of 2025. Interest on the Credit Facility decreased due to lower interest rates, with a weighted average annual interest rate of 7.3% during the three months ended March 31, 2026 compared to 8.3% during the three months ended March 31, 2025. Offsetting this impact was higher amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $430.4 million during the three months ended March 31, 2026 compared to approximately $393.3 million during the three months ended March 31, 2025.
Current wording
Interest expense. Interest expense decreased by approximately $4.3 million from $21.3 million to $17.0 million, primarily due to lower interest rates, with a weighted average annual interest rate of 7.3% during the six months ended June 30, 2026 compared to 8.4% during the six months ended June 30, 2025, as well as lower amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $422.7 million during the six months ended June 30, 2026 compared to approximately $425.0 million during the six months ended June 30, 2025. Also impacting the reduction in interest expense was a decrease in the amortization of deferred financing costs as a result of the amendment and restatement of the credit agreement in the second quarter of 2025.
Previous wording
Gain (loss) on derivative contracts. We recorded a loss on derivative contracts of $82.2 million for the three months ended March 31, 2026 and a loss on derivative contracts of $0.9 million for the three months ended March 31, 2025. For the derivative contract settlements, we recorded a realized loss of $5.3 million for the three months ended March 31, 2026 compared with a realized loss of $0.6 million for the three months ended March 31, 2025. The change of $4.7 million in the realized derivative gain (loss) was primarily a result of less favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized loss of $77.0 million for the three months ended March 31, 2026 and an unrealized loss of $0.4 million for the three months ended March 31, 2025. This negative change in unrealized derivatives primarily reflects changes in the crude oil forward curve during the quarter, including a late quarter increase in forward prices, which reduced the fair value of the Company's outstanding crude oil derivative positions.
Current wording
Gain (loss) on derivative contracts. We recorded a loss on derivative contracts of $58.5 million for the six months ended June 30, 2026 and a gain on derivative contracts of $13.7 million for the six months ended June 30, 2025. For the derivative contract settlements, we recorded a realized loss of $23.7 million for the six months ended June 30, 2026 compared with a realized gain of $0.1 million for the six months ended June 30, 2025. The change of $23.9 million in the realized derivative gain (loss) was primarily a result of less favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized loss of $34.8 million for the six months ended June 30, 2026 and an unrealized gain of $13.6 million for the six months ended June 30, 2025. This negative change in unrealized derivatives primarily reflects changes in the crude oil forward pricing curve during the quarter.
Previous wording
Gain (loss) on disposal of assets. The Company's gain on disposal of assets decreased by $124,610 from $124,610 to $— with $131,584 of the decrease from the sale of leased vehicles offset by $6,974 from selling owned vehicles.
Current wording
Gain (loss) on disposal of assets. The Company's gain on disposal of assets decreased by $175,753 from $279,903 to $104,150 with $205,869 of the decrease from the sale of leased vehicles offset by a positive $30,116 from selling owned vehicles.
Previous wording
Other income. Other income decreased $3,105 from $8,942 to $5,837 due to a reduction of $3,105 in income from the Company's charge card rebate program.
Current wording
Other income. Other income decreased $144,275 from $159,712 to $15,437 due to a reduction of $150,770 from a pipeline easement lease and a reduction of $3,105 in income from the Company's charge card rebate program, offset by an increase of $9,600 in income from a ranching lease.
Previous wording
Provision for income taxes. The provision for income taxes changed from a provision of $3.0 million for the three months ended March 31, 2025 to a benefit of $12.0 million for the three months ended March 31, 2026. The provision for income taxes was calculated using the annual effective tax rate method based on our estimated earnings and estimated state and federal income taxes due for 2026, taking into account all applicable tax rates and laws.
Current wording
Provision for income taxes. The provision for income taxes changed from a provision of $9.1 million for the six months ended June 30, 2025 to a benefit of $10.9 million for the six months ended June 30, 2026 due to a year-to-date pre-tax loss for the six months ended June 30, 2026. The provision for income taxes was calculated using the annual effective tax rate method based on our estimated earnings and estimated state and federal income taxes due for 2026, taking into account all applicable tax rates and laws.
Previous wording
As of March 31, 2026, we had cash on hand of $1.0 million, compared to $0.9 million as of December 31, 2025. We strive to keep our cash balance as low as possible to minimize our outstanding debt and associated interest. At certain times we reflect a zero book balance while utilizing the float on outstanding checks. We had net cash provided by operating activities for the three months ended March 31, 2026 of $25.9 million, compared to net cash provided by operating activities of $28.4 million for the same period in 2025, which was primarily due to lower year to date revenues, which resulted in less cash received from purchasers. We had net cash used in investing activities of $31.0 million for the three months ended March 31, 2026, compared to net cash used in investing activities of $102.6 million for the same period in 2025, driven by the payments made for the Lime Rock acquisition in 2025, with no comparable payments made to date in 2026. Payments to develop oil and natural gas properties grew slightly and the Company sold non-operated working interests in 2026, as reflected in proceeds from divestiture of oil and natural gas properties. Net cash provided by financing activities was $5.3 million for the three months ended March 31, 2026 and net cash provided by financing activities was $73.5 million for the three months ended March 31, 2025, during which time $6.0 million was the net borrowing and $75.0 million was the net borrowing of principal on our Credit Facility, respectively.
Current wording
As of June 30, 2026, we had cash on hand of $1.1 million, compared to $0.9 million as of December 31, 2025. We actively manage our cash to optimize liquidity and minimize outstanding debt and associated interest costs. At certain times we reflect a zero book balance while utilizing the float on outstanding checks. We had net cash provided by operating activities for the six months ended June 30, 2026 of $66.7 million, compared to net cash provided by operating activities of $61.7 million for the same period in 2025, which was primarily due to higher year to date revenues, which resulted in more cash received from purchasers, offset by higher realized derivative losses. We had net cash used in investing activities of $71.9 million for the six months ended June 30, 2026, compared to net cash used in investing activities of $121.0 million for the same period in 2025, driven by the payments made for the Lime Rock acquisition in 2025, with no comparable acquisition made to date in 2026. Capital expenditures for the development of oil and natural gas properties grew meaningfully and the Company sold non-operated working interests in 2026, as reflected in proceeds from divestiture of oil and natural gas properties. Net cash provided by financing activities was $5.4 million for the six months ended June 30, 2026 and net cash provided by financing activities was $57.4 million for the six months ended June 30, 2025, during which time $60.0 million was the net paydown and $63.0 million was the net borrowing of principal on our Credit Facility, respectively.
Previous wording
As of March 31, 2026, $426 million was outstanding on our Credit Facility and we were in compliance with all of the covenants under the Credit Facility. The Credit Facility matures in June 2029. The borrowing base under our Credit Facility is $585 million. The borrowing base is redetermined semi-annually each May and November. See "NOTE 8 — REVOLVING LINE OF CREDIT" in the Notes to the condensed financial statements for more information on our Credit Facility.
Current wording
As of June 30, 2026, $360 million was outstanding on our Credit Facility and we were in compliance with all of the covenants under the Credit Facility. The Credit Facility matures in June 2029. The borrowing base under our Credit Facility is $585 million. The borrowing base is redetermined semi-annually each May and November. See "NOTE 8 — REVOLVING LINE OF CREDIT" in the Notes to the condensed financial statements for more information on our Credit Facility.
Rearranged current paragraphs (15)
Current report — wording carried from elsewhere
Natural gas sales. Natural gas sales decreased approximately $6.9 million from a negative $2.2 million to a negative $9.2 million. Our natural gas sales volumes increased from 1,703,808 Mcf to 1,764,659 Mcf, and the average realized price per Mcf decreased from $(1.31) to $(5.20). Of the increase in volume of 60,851 Mcf, an increase of 30,268 Mcf was from the wells acquired and drilled in the Lime Rock acquisition area and an increase of 30,583 Mcf was attributable to legacy assets. The price decrease was driven by depressed market conditions. The realized revenue pricing included the impact of gas plant processing fees that were netted from revenue. For the three months ended June 30, 2026, gross revenues were $(3.01) per Mcf and fees were $(2.19) per Mcf, compared to gross revenues of $0.87 per Mcf and fees of $(2.18) per Mcf for the three months ended June 30, 2025. This resulted in a net realized price of $(5.20) per Mcf for the three months ended June 30, 2026 compared to $(1.31) per Mcf for the three months ended June 30, 2025.
Current report — wording carried from elsewhere
Oil, Natural Gas, and Natural Gas Liquids Revenues for the Six Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
(1) Boe is calculated using six Mcf of natural gas as the equivalent of one barrel of oil.
Current report — wording carried from elsewhere
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 4.64% for the three months ended June 30, 2025 and increased to 4.82% for the three months ended June 30, 2026. Both percentages are in line with historical rates.
Current report — wording carried from elsewhere
Production Costs for the Six Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
Gathering, transportation and processing costs. Our total GTP decreased $118,470 from $337,421 to $218,951 and decreased on a per Boe basis from $0.09 to $0.06. The decrease in GTP costs was primarily a result of a reduction in gas processing costs.
Current report — wording carried from elsewhere
Other Costs and Operating Expenses for the Six Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
Asset retirement obligation accretion. Our ARO accretion increased by $88,640 from $708,800 to $797,440 primarily due to additional ARO accretion associated with properties acquired in the Lime Rock Acquisition, as well as newly drilled wells, offset by those plugged and abandoned and sold.
Current report — wording carried from elsewhere
Operating lease expense. Our operating lease expense costs were the same period over period.
Current report — wording carried from elsewhere
Interest income. Interest income increased from $69,658 to $148,540 as a result of $78,882 in higher earnings on excess cash balances in bank sweep accounts.
Current report — wording carried from elsewhere
Gain (loss) on derivative contracts. We recorded a gain on derivative contracts of $23.7 million for the three months ended June 30, 2026 compared to a gain on derivative contracts of $14.6 million for the three months ended June 30, 2025. For the derivative contract settlements, we recorded a realized loss of $18.5 million for the three months ended June 30, 2026 and a realized gain of $0.7 million for the three months ended June 30, 2025. The change of $19.1 million in the realized gain (loss) was primarily a result of less favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized gain of $42.2 million for the three months ended June 30, 2026 and an unrealized gain of $14.0 million for the three months ended June 30, 2025. The change in position was primarily due to the changes in crude oil futures prices.
Current report — wording carried from elsewhere
Gain (loss) on disposal of assets. The Company's gain on disposal of assets decreased by $51,143 from $155,293 during the three months ended June 30, 2025 to $104,150 during the three months ended June 30, 2026, with a reduction of $74,285 from the sale of leased vehicles, offset by an increase of $23,142 from selling owned vehicles.
Current report — wording carried from elsewhere
Other Income (Expense) for the Six Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
Provision for income taxes. The provision for income taxes changed from a provision of $6.1 million for the three months ended June 30, 2025 to a provision of $1.1 million for the three months ended June 30, 2026, due to the decrease in pre-tax book income for the three months ended June 30, 2026, netted against the recording of the valuation allowance. The provision for income taxes was calculated using the annual effective tax rate method based on our estimated earnings and estimated state and federal income taxes due for 2026, taking into account all applicable tax rates and laws.
Current report — wording carried from elsewhere
Benefit from (Provision for) Income Taxes: for the Six Months Ended June 30, 2026 and 2025